A long in-depth study as to what we can expect for the world economy when the lockdowns finally end.
The summary- we are in for a world of hurt, thanks to a lot of built-in structural difficulties that COVID has dramatically exposed, including:
Oil and commodity prices being too LOW for producers
The knock on effects being that wages cannot be generated sufficiently to allow wage-earners’ robust participation in the economy (kind of a viscious cycle- if wager earners can’t afford goods and services, it depresses demand for commodities, lowering their price and beginning the cycle all over again) and
We have been butting up against resource shortages for some time because of this cycle and because resources ARE becoming scarcer and harder (more energy-intensive) to produce
Central banks flooding an already debt-flooded world economy won’t help
This person is a huge pessimist, and she’s going to throw out ideas the some here will both accept (shutdowns will irreparably hurt the economy) and reject (there are resource constraints driving a lot of this).
One thing I think she overlooks is the human capacity for adaptation. Surprising given she wrote an article titled “Resilience” (which I have not read).
“Collapse” is interesting. “Collapse” of what? Our current assumptions used to predict the future? Quite possibly.
If we were to make a list of critical “commodities” every 100 years over the past 500, would they be the same? Some would be, others not so much.
What we value depends on our values. Our values can change.
Many workers will be laid off, either temporarily or permanently. Goods and services will suddenly be less affordable for these former workers. Many will fall behind on their rent and other obligations.
The laid off workers will be unable to pay much in taxes. In the US, state and local governments will need to cut back the size of their programs to match lower revenue because they cannot borrow to offset the deficit.
I take issue with these two bullet points in the middle of her article. There is no reason for workers to fall behind on their major obligations.
Pausing mortgages, rents, and property taxes at every level, continuously moving the pain up the chain to the largest financial entities–then bailing those entities out–will alleviate most of that pain.
Business will be less likely to lay people off and less reticent to rehire if they don’t have to worry about their commerical lease right now. Payrolls can be compensated with stimulus which can be paid for by printing money. Inflation is not a concern now, deflation seems more likely.
I disagree. After the housing crisis I basically taken myself out of society. Stopped working the hours I use to work. I used up most of my retirement savings. For me it just wasn’t worth the fight, the effort again…beside my body couldn’t take the punishment to rebuild. So I altered my life accordingly.
After this lot more people will follow my footsteps. Their is only so much fight in any individual. They will make adjustment instead of rebuilding.
In my opinion, this is doom and gloom nonsense. There should be no longterm drop in supply, demand or productive capability as the result of these temporary shutdowns. A long term economic downturn would be the result of bad government, not some sort of inevitability.
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